Netflix Gets Wells Notice Over CEO Hastings’ Facebook Post

Netflix and CEO Reed Hastings both received Wells Notices from the SEC, according to a filing this afternoon related to something Hastings wrote on Facebook back in June.

Shares are taking it pretty well. The stock is down only about 1.5% in late trading, at $84.85.

A Wells notice is a notification from a securities regulator that it intends to recommend enforcement action and affords the respondent an opportunity to explain why such an action is not appropriate.

Back in July, Hastings wrote on his Facebook page that Netflix users had streamed more than 1 billion hours of video in June. The SEC is apparently looking into whether or not that violates fair-disclosure rules.

Here’s the pertinent bit from the filing:

On December 5, 2012, Netflix, Inc. (“the Company”) and its Chief Executive Officer Reed Hastings each received a “Wells Notice” from the Staff of the Securities and Exchange Commission (“SEC”) indicating its intent to recommend to the SEC that it institute a cease and desist proceeding and/or bring a civil injunctive action against Netflix and Mr. Hastings for violations of Regulation Fair Disclosure, Section 13(a) of the Securities Exchange Act and Rules 13a-11 and 13a-15 thereunder. A copy of a statement that will be made by Mr. Hastings to subscribers on his publicly available Facebook page is attached as Exhibit 99.1.